JP Morgan Tests Blockchain’s Capital Markets Potential | WSJ

The bank demonstrated a prototype of its blockchain-based platform for capital markets, called Dromaius, on Wednesday at the Consensus 2018 conference. A team of employees will work this year on overcoming challenges related to integrating and scaling the technology before deploying it to customers, said Christine Moy, executive director and head of J.P. Morgan’s Blockchain Center of Excellence.

“We think the technology has the potential to be transformative,” she said.

Blockchain is the technology best known as the record-keeping system behind cryptocurrencies. A blockchain ledger allows participants to add blocks of information after each party runs algorithms to evaluate a proposed transaction.

If the parties agree that the transaction looks valid — identifying information matches the blockchain’s history and follows the rules created by the participants — then it will be approved, time-stamped and added to the chain. The data, encrypted and unchangeable, is always up-to-date on all participants’ systems. Blockchains appeal to banks because they can potentially reduce some costs, but the technology raises questions about how banks would handle proprietary information on such a transparent ledger, as WSJ has previously reported.

J.P. Morgan joins other banks including Banco Santander S.A. that are experimenting with how blockchain-based platforms could be used for capital markets, where huge sums of money, a variety of stakeholders and lots of coordination are involved.